For the past four months, Dubai resident Shashwat Phumbhra, a 28-year-old Indian equity analyst and trader, has been investing in Dogecoin but says his investment in the cryptocurrency does not depend on Tesla chief executive Elon Musk’s tweets.
“If one is making investment decisions on the basis of a billionaire’s tweet, there is a problem with the investor,” he tells The National. However, he is a big fan of Mr Musk and Tesla shares make up a big portion of his investment portfolio.
Mr Phumbhra first bought Dogecoin when it was priced between $0.05 and $0.07 and it multiplied in value. He added more Dogecoin to his portfolio when it was trading at $0.25 and $0.3. He later exited his holding when the parody cryptocurrency was valued at between $0.4 and $0.6. Although he has booked a tidy profit, he declined to say how much he invested.
If one is making investment decisions on the basis of a billionaire’s tweet, there is a problem with the investor
Shashwat Phumbhra, trader and equity analyst
Dogecoin is a cryptocurrency that was created in 2013 as a joke by engineers Billy Markus and Jackson Palmer. The term Dogecoin was borrowed from a popular Doge meme at the time featuring the Japanese Shiba Inu dog.
Cryptocurrency investors have been rocked in recent weeks as environmental concerns over mining, regulatory scrutiny, warnings by Chinese authorities about digital currency payments and a flurry of erratic tweets by billionaire Tesla chief executive Elon Musk whipsawed prices.
Pressure on Bitcoin, in particular, intensified after Mr Musk reversed his stance on Tesla accepting Bitcoin as a mode of payment for its electric vehicles.
About 17 per cent of investors who have bought cryptocurrencies “fully understand” their value and potential, while 33.5 per cent of buyers have either zero knowledge about the digital assets or would define their level of understanding as “emerging”, according to the findings of a survey by market research company Cardify in March this year.
“In the crypto world, things don’t always move because there is reason behind it. It moves if there are enough people behind it,” says Mr Phumbhra, who never invests money he can’t afford to lose into memecoins because of their speculative nature.
Aside from Dogecoin, Mr Phumbhra has also invested in other altcoins such as Ethereum, Litecoin, Binance coin and some Eos. He trades in cryptocurrencies on platforms such as Interactive Brokers, CMC and IG.
“If you don’t know too much about cryptos, stick to the visible, large coins. Don’t put [in] a large chunk of money which you are afraid to lose,” he says.
Although Mr Phumbhra believes a small allocation in cryptocurrencies can provide outsized returns over the course of time, he warns novice investors that these digital tokens can crash by 20 to 30 per cent overnight, driven by Mr Musk’s tweets or a government’s announcement.
After hitting a record high of $64,800 in mid-April, Bitcoin fell by 53 per cent to an almost three-month low of about $30,066 on May 19. It has since regained some ground and, at the time of writing, is trading at $35,851, according to Coinmarketcap.com. Ethereum, meanwhile, fell to $1,850 on May 19 – the largest single-day loss for the crypto since March 2020 – and currently trades at $2,428. Dogecoin touched an all-time high of $0.75 on May 7 after Mr Musk tweeted a promotional image for his Saturday Night Live appearance, which was photoshopped to include an image of the Shiba Inu dog. It currently trades at $0.3067.
That’s the nature of cryptocurrencies. If that scares you, then do not put money behind them, Mr Phumbhra says.
The Central Bank of the UAE has previously issued guidance on cryptocurrencies, saying that it is not “presently accepting [or acknowledging] crypto assets or virtual assets as…